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December 22, 2005

Frist AIDS Charity Paid Consultants

WASHINGTON - Senate Majority Leader Bill Frist's AIDS charity paid nearly a half-million dollars in consulting fees to members of his political inner circle, according to tax returns providing the first financial accounting of the presidential hopeful's nonprofit.

The returns for World of Hope Inc., obtained by The Associated Press, also show the charity raised the lion's share of its $4.4 million from just 18 sources. They gave between $97,950 and $267,735 each to help fund Frist's efforts to fight AIDS.

The tax forms, filed nine months after they were first due, do not identify the 18 major donors by name.

Frist's lawyer, Alex Vogel, said Friday that he would not give their names because tax law does not require their public disclosure. Frist's office provided a list of 96 donors who were supportive of the charity, but did not say how much each contributed.

The donors included several corporations with frequent business before Congress, such as insurer Blue Cross/Blue Shield, manufacturer 3M, drug maker Eli Lilly and the Goldman Sachs investment firm.

World of Hope gave $3 million it raised to charitable AIDS causes, such as Africare and evangelical Christian groups with ties to Republicans — Franklin Graham's Samaritan Purse and the Rev. Luis Cortes' Esperanza USA, for example.

The rest of the money went to overhead. That included $456,125 in consulting fees to two firms run by Frist's longtime political fundraiser, Linus Catignani. One is jointly run by Linda Bond, the wife of Sen. Christopher "Kit" Bond, R-Mo.

The charity also hired the law firm of Vogel's wife, Jill Holtzman Vogel, and Frist's Tennessee accountant, Deborah Kolarich.

Kolarich's name recently surfaced in an e-mail involving Frist's controversial sale of stock in his family founded health care company. That transaction is now under federal investigation.

Jill Holtzman Vogel, who is raising money for a run for the state Senate in Virginia in 2007, has received thousands in contributions this year from Catignani & Bond and from her husband, among numerous other sources, according to data released by the Virginia Public Access Project.

Alex Vogel said Frist picked people to work on his charity whom he trusted and knew, such as Vogel's wife, and was proud that overhead costs amounted to less than $1 of every $5 raised. "It's leaner than the average charity," Vogel said.

Frist is listed as the charity's president and his wife was listed as secretary. Neither was compensated.

Political experts said both the size of charity's big donations and its consulting fees raise questions about whether the tax-exempt group benefited Frist's political ambitions.

"One of the things people who are running for president try to do is keep their fundraising staff and political people close at hand. And one of the ways you can do that is by putting them in some sort of organization you run," said Larry Noble, the government's former chief election lawyer who now runs the nonpartisan Center for Responsive Politics that studies fundraising.

Kent Cooper, theFederal Election Commission's former public disclosure chief, said the big donors' motives are also suspect.

"These tax deductible gifts were earmarked through Senator Frist," Cooper said. "They were raised in the political arena at the 2004 Republican Convention and the natural question is were they given to the Senate majority leader to gain favor or were they given for true charitable purposes?"

Cooper said the consulting fees were "excessively high" and the fact that they were "paid to primarily political consultants also raises questions about the long-range strategic benefits for the 2008 presidential race."

A charity could lose its tax-exempt status if it is found to be involved with political activity, said Marcus S. Owens, a former director of theInternal Revenue Service's Exempt Organizations Division.

"If the IRS were to conduct an examination, what they would look for would be the relationship between the organization and any incumbent politician or candidate," Owens said. "They'd be particularly interested in transactions of money or assistance of any kind being provided."

Frist formed the charity in 2003. It drew attention in August 2004 when it held a benefit concert in New York during the Republican National Convention at whichPresident Bush was nominated for re-election.

The group's 2004 tax return was due April 15, 2005, but it filed for two extensions and only reported its activity to the IRS last month.

The tax forms show at least 11 of the charity's 18 biggest donors gave $97,950 each, that one gave $100,000 and that the rest gave more than $245,000 each.

Vogel said Catignani was paid the fees because he helped arrange the New York concert that featured country stars Brooks & Dunn, handling both the event arrangements and fundraising.

The tax forms show Catignani's fundraising firm, Catignani & Bond, was paid a total of $276,125 and his event-planning arm, Consulting Services Group, was paid $180,000.

The amount Catignani was paid by Frist's charity in 2004 is roughly the same as what his firms received over the past three years for work for Frist's political action committee, Volunteer PAC. The firm collected $523,666 in fees from the PAC since 2003, FEC records show.

World of Hope's beneficiaries include evangelical Christian groups with Republican connections.

Cortes, Esperanza USA's president, is an influential evangelical leader who hosted Bush at this year's National Hispanic Prayer Breakfast.

Frist has worked and traveled extensively with Samaritan's Purse in Africa as well as during the immediate aftermath of Hurricane Katrina. Franklin Graham is the son of the Rev. Billy Graham.